Overall, when viewed through the eyes of an expat, Australian housing has actually dropped in price outside the Sydney and Melbourne markets.
Having given up on Aussie housing in 2014, somewhat due to inflated property prices, but mainly because of the high Australian Dollar (AUD) throughout the year, expats are now re-entering the Australian property market as the Aussie dollar sinks to new lows.
Whilst local house prices have risen steadily in Sydney and Melbourne for the past two years, when priced in USD, Pounds, or EURO, adjusted housing costs have not risen at all in real terms for expats. The latest fall in the Aussie dollar, bringing it into the high $0.70’s against the USD, has more than offset any Australian housing price rises for those living abroad being paid in any of the major world currencies.
One interesting point about the apparent ‘property bubble’ in Australia, is that the recent price rises have been confined mainly to Sydney and Melbourne. Overall, when viewed through the eyes of an expat, Australian housing has actually dropped in price outside the Sydney and Melbourne markets.
A return of expats to the market in 2015 will offer some support to house prices, which are no doubt going to be pressured by rising unemployment and wobbly consumer confidence.
Interest rates are now tipped to fall further, which would push the AUD even lower again, in the hope of stimulating confidence in the broader economy. An even lower AUD should see foreign investor’s money continue to flow into the property market.
Expats have not seen Aussie housing this affordable since the GFC when the AUD hit $0.625 against the USD in late 2008. Since then, the dollar reached a peak of $1.10 and spent two years at or above parity. While the AUD sat at these elevated levels, it terminated expat interest in Aussie housing.
The Reserve Bank of Australia (RBA) continually talked the AUD down throughout 2014 to the point where it now seems we are set to see sub $0.80 against the USD. If the dollar does settle in the $0.70’s, expats will be tempted to re-enter the market in big numbers.
The lower the AUD goes, the more likely we are to see many expats buying Aussie housing.